28 November 2014edge review

A US$1.50 Ooredoo SIM card. (Wayan Vota/Flickr).

The mobile revolution is on in Myanmar – if it can clear its infrastructure bottlenecks

In early 2010, when Michael Lwin flew from the US on a research trip to Myanmar and met his distant cousin Yarzar Min Htoo for the first time, a momentous shift was afoot in the country that neither really saw coming.

Two years later, after the easing of US sanctions, the affable Lwin, a lawyer by training, and Min Htoo, a medical doctor with a computer science background, joined forces to establish Koe Koe Tech, a mobile-focused start-up dedicated to improving health outcomes in one of Asia’s poorest countries.

The pair exemplify Myanmar’s new breed of mobile entrepreneurs who have set to work over the past two years developing platforms to facilitate everything from mobile payments to social networking.

But mobile services in Myanmar are not quite ready for prime time.

When the government introduced cell phones in 2000, a SIM card cost an astronomical US$5,000; although prices had dropped to roughly US$100 early this year, mobile phones remained out of reach for most. Mobile penetration hovers at just 15 per cent, lagging far behind all of Myanmar’s immediate neighbours.

But using a mobile did suddenly become much more affordable in the middle of this year with the arrival of two new entrants – Ooredoo from Qatar and Norway’s Telenor, whose SIM cards cost a decidedly more reasonable US$1.50.

The government-owned incumbent, Myanmar Posts and Telecommunications (MPT), has partnered with Japan’s KDDI and Sumitomo to upgrade its network, and has matched the newcomers’ low prices to stay competitive.

Plunging consumer hardware prices, combined with a lack of “legacy” 2G networks, mean that most of Myanmar’s newly connected citizens will leap directly into the smartphone era.

A survey in June discovered that just 3.5 per cent of telephone owners use “feature phones” without web access, paradoxically giving Myanmar the world’s highest ratio of smartphone users to total mobile subscribers.

Taking advantage of this, Koe Koe Tech has partnered with Ooredoo, industry association GSMA and public health organisation Population Services International to launch its first product, MayMay, which delivers maternal health advice by way of an Android app and SMS.

Lwin expects eventually to expand it into a platform to allow for two-way communication between doctors and patients in remote, underserved areas.

But while Lwin extols MayMay’s time-saving and interactivity virtues, most of Myanmar’s rural poor cannot access it because the infrastructure isn’t there yet.

Although all three networks have ambitious expansion plans –Telenor and Ooredoo both pledge 97 per cent coverage within five years – the newcomers have so far focused on servicing major urban areas, and MPT’s 3G coverage remains shaky in the countryside.

Ooredoo got off to a rocky start. Despite big promises, its early real-world performance was marred by dropped calls, slow data speeds and spotty service.

This is to be expected in a country with inadequate domestic fibre-optic capacity and limited access to the global Internet cable network, claims Christopher Chit Tun, Myanmar country head of consulting firm Deloitte. “For anyone coming in, I don’t think they could meet people’s expectations,” he laughs. “You can’t become Singapore overnight. That’s the reality.”

Fundamental infrastructure bottlenecks – including a lack of electrification, road connectivity, and a skeletal financial system – mean that it will take a long time before mobile networks can serve as a value-added growth engine in their own right.

“You’re going to see the real impact after 2015 and beyond,” Chit Tun says. “It’s not going be a super jump within a year or two. Other infrastructure [still has to] come in place.”

Parliament passed a new telecommunications law in December 2013, but its implementing rules and regulations remain in draft form. Chit Tun expects they will be formally enacted early next year. It also hands the government sweeping surveillance powers and the right to block information in the name of “defense and security”, problematic clauses given Myanmar’s history of iron-fisted repression.

A more immediate concern, though, is the stultifying effect that Myanmar’s “crony capitalists” may have on the development of the telecommunications sector if they successfully petition the government to hand out protectionist concessions.

“I would like [Myanmar] to take a more global view. Local businesses need to be protected, but when you overly protect you can’t do anything,” Chit Tun said.

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